1.Delay
condoned. Issue notice. Petitioner to file copies of correspondence with State
Information Commissioner as also its title deeds to the disputed property. As
this case is a typical example of an irregular process spreading across the
country, we propose to refer to some aspects of the case at this preliminary
stage itself.

2.The
petitioner, a company incorporated under the Companies Act, claims that one
Ramnath and his family members sold two and half acres of land in Wazirabad
village, Gurgoan to them by means of an agreement of sale, General Power of
Attorney (for short `GPA') and a will in the year 1991 for a consideration of Rs.716,695/-.
It is further alleged that the petitioner verbally agreed to sell a part of the
said property measuring one acre to one Dharamvir Yadav for Rs.60 lakhs in
December 1996. It is stated that the said Dharamvir Yadav, and his son Mohit
Yadav (an ex MLA and Minister), instead of proceeding with the transaction with
the petitioner, directly got in touch with Ramanath and his family members and
in 1997 got a GPA in favour of Dharamvir Yadav in regard to the entire two and
half acres executed and registered and illegally cancelled the earlier GPA in
favour of petitioner. The petitioner claims that when its Director, S.K.
Chandak, confronted Dharamvir Yadav in the year 1999 this behalf, the said
Yadav apologized and issued a cheque for Rs.10 lakhs towards part payment and
agreed to pay the balance of Rs.50 lakhs shortly but that the said cheque was
dishonoured necessitating a complaint under section 138 of the Negotiable
Instrument Act, being filed against Dharamvir Yadav which is pending in a
criminal court at Patiala House, New Delhi. It is further alleged that in the
year 2001, petitioner lodged a criminal complaint against Ramanath and members
of his family who executed the sale agreement/ GPA/will in favour of the
petitioner and another complaint against Dharambir Yadav and his son in the
District Court, Gurgoan, for offences punishable under sections 406, 420, 467,
468, 471 and 120B of IPC.

The petitioner claims
that in December 2005 it lodged an FIR in respect of offences under Sec.
406,467,468,471 and 120B of IPC against all of them.

3.The
petitioner claims that as no action was taken on its FIR by the Station House
Officer/Investigation Officer (`SHO/IO' for short), petitioner filed an
application under Right to Information Act, 2004 (`RTI Act' for short) seeking
the status, in response to which the SHO/IO gave contradictory and misleading
versions about the status of the investigation and about the seizure and
custody of the agreement and power of attorney from the accused. An appeal
filed by the petitioner was disposed of by the Chief Information Commissioner,
Haryana, by an order dated 27.12.2007 merely directing that Police should
re-investigate the FIR as per the order of the court and the Department should
give a specific proper reply about the status of the documents, to the
appellant by 25.1.2008. According to the petitioner, the Commissioner ought to
have initiated action against the police for giving false and misleading
information under section 20 of the RTI Act.

Petitioner therefore filed
a writ petition challenging the order of the Chief Information Commissioner and
seeking initiation of proceedings under section 20 of the RTI Act and
imposition of penalty. The said writ petition
was disposed of by the High Court by the impugned order holding that section 20
was directory and not mandatory.

This SLP seeks leave
to file an appeal against the said order.

4.We
are of the view that matter involves an issue whose seriousness is
underestimated. The issue to be addressed is avoidance of execution and
registration of deeds of conveyance as the mode of transfer of freehold
immovable property by increasing tendency to adopt `Power of Attorney Sales',
that is execution of sale agreement/ general power of attorney/will (for short
`SA-GPA-Will transactions') instead of execution and registration of regular
deeds of conveyance, on receiving full consideration. This method adopted has
the following variants:

(i)Execution of an
agreement of sale, one or two powers of attorney, with or without a will, all
unregistered.

(ii)Execution of an
agreement of sale, power/s of attorney and will, registering either all of
them, or any two of them, or any one of them.

5.The
`Power of Attorney Sales' as a method of `transfer' was evolved by lawyers and
document writers in Delhi, to overcome certain restrictions on transfer of
flats by the Delhi Development Authority (for short `DDA').

DDA had undertaken
large scale development by constructing of flats. It is stated that when DDA
allotted a flat to an allottee, any transfer of the assignment by the allottee
required the permission of DDA and such permission was granted only on payment
to DDA of the `unearned increase', that is the difference between the market
value/sale price and the original cost of allotment. To avoid the cumbersome
procedure in obtaining permission and to avoid payment of the huge part of the
price to the DDA as unearned increase, a hybrid system was evolved whereby the
allottee/holder of the flat, on receiving the agreed consideration would
deliver the possession of the flat to the purchaser and execute the following
documents :

(a)An Agreement of
sale confirming the terms of the sale, delivery of possession and payment of
full consideration and undertaking to execute any document when required in
future.

(b)An Irrevocable
General Power of Attorney in favour of the purchaser or his nominee authorizing
him to manage, deal with and dispose of the property without reference to the
vendor.

(c)A will bequeathing
the property to the purchaser as safeguard against the consequences of death of
the vendor before transfer.

6.The
`Power of Attorney Sales', as noticed above was adopted to overcome the
restrictions/prohibitions in terms of allotment and the rules of allotment of
DDA governing the allotment of flats. Such transactions were obviously
irregular and illegal being contrary to the rules and terms of allotment.
Further, in the absence of a registered deed of conveyance, no right, title or
interest in an immovable property could be transferred to the purchaser.
However, the Delhi High Court in a few cases accepted such `Power of Attorney
Sales' as creating an `interest' in the DDA flat which was so `transferred' and
consequently, protected such interest of the purchaser by issuing injunctions
or decrees preventing the vendor from further dealing with the property. This
led to a general impression the `Power of Attorney Sales' were valid recognized
modes of transfer and the very purpose DDA prohibiting transfers and requiring
permission on payment of certain difference in price was defeated by this
process.

We are not presently
concerned with the validity, propriety or wisdom of such judgments which
virtually put the seal of approval of the court on transactions which were
irregular and illegal. In fact, it is stated that DDA itself ultimately
recognizes `Power of Attorney Sales' by accepting applications from purchasers
under `Power of Attorney Sales' for conversion from leasehold to freehold and
conveyance of the flats. We will therefore presently exclude the `power of
attorney sales' of DDA flats from the purview of the present exercise.

7.What
we are concerned is extension of the concept of such `Power of Attorney Sales'
by execution of SA/GPA/Will with reference to freehold properties.

8.The
Registration Act, 1908, was enacted with the intention of providing
orderliness, discipline and public notice in regard to transactions relating to
immovable property and protection from fraud and forgery of documents of
transfer. This is achieved by requiring compulsory registration of certain
types of documents and providing for consequences of non-registration. Section
17 of the Registration Act clearly provides that any document (other than
testamentary instruments) which purports or operates to create, declare,
assign, limit or extinguish whether in present or in future "any right,
title or interest" whether vested or contingent of the value of Rs.100 and
upwards to or in immovable property.

Section 49 of the
said Act provides that no document required by section 17 to be registered
shall, affect any immovable property comprised therein or received as evidence
of any transaction affected such property, unless it has been registered.
Registration of a document gives notice to the world that such a document has
been executed. Registration provides safety and security to transactions
relating to immovable property, even if the document is lost or destroyed. It
gives publicity and public exposure to documents thereby preventing forgeries
and frauds in regard to transactions and execution of documents. Registration
provides information to people who may deal with a property, as to the nature
and extent of the rights which persons may have, affecting that property. In
other words, it enables people to find out whether any particular property with
which they are concerned, has been subjected to any legal obligation or liability
and who is or are the person/s presently having right, title, and interest in
the property. It gives solemnity of form and perpetuate documents which are of
legal importance or relevance by recording them, where people may see the
record and enquire and ascertain what the particulars are and as far as land is
concerned what obligations exist with regard to them. It ensures that every
person dealing with immovable property can rely with confidence upon the
statements contained in the registers (maintained under the said Act) as a full
and complete account of all transactions by which the title to the property may
be affected and secure extracts/copies duly certified. 9. Recourse to
`SA/GPA/WILL' transactions is taken in regard to freehold properties, even when
there is no bar or prohibition regarding transfer or conveyance of such
property, by the following categories of persons :- (a)Vendors with imperfect
title who cannot or do not want to execute registered deeds of conveyance.

(b)Purchasers who want
to invest undisclosed wealth/income in immovable properties without any public
record of the transactions. The process enables them to hold any number of
properties without disclosing them as assets held.

(c)Purchasers who
want to avoid the payment of stamp duty and registration charges either
deliberately or on wrong advice. Persons who deal in real estate resort to
these methods to avoid multiple stamp duties/registration fees so as to
increase their profit margin.

9.Whatever
be the intention, the consequences are disturbing and far reaching, adversely
affecting the economy, civil society and law and order. Firstly, it enables
large scale evasion of income tax, wealth tax, stamp duty and registration fees
thereby denying the benefit of such revenue to the government and the public.

Secondly, such
transactions enable persons with undisclosed wealth/income to invest their
black money and also earn profit/income, thereby encouraging circulation of
black money and corruption. This kind of transactions has disastrous collateral
effects also. For example, when the market value increases, many vendors (who
effected power of attorney sales without registration) are tempted to resell
the property taking advantage of the fact that there is no registered
instrument or record in any public office thereby cheating the purchaser. When
the purchaser under such `power of attorney sales' comes to know about the
vendors action, he invariably tries to take the help of musclemen to `sort out'
the issue and protect his rights. On the other hand, real estate mafia many a
time purchase properties which are already subject to power of attorney sale
and then threaten the previous `Power of Attorney Sale' purchasers from asserting
their rights.

Either way, such
power of attorney sales indirectly lead to growth of real estate mafia and
criminalization of real estate transactions.

10.Some
states have made some efforts to control such `Power of Attorney Sales' by
subjecting agreements of sale involving delivery of possession and irrevocable
powers of attorney for consideration, to the same stamp duty as deeds of
conveyance or by making such documents compulsorily registrable. But the steps
taken are neither adequate nor properly implemented resulting in multiple
transactions in regard to the same property by greedy and unscrupulous vendors
and/or purchasers giving nightmares to bonafide purchasers intending to buy a
property with certainty regarding title. It also makes it difficult for lawyers
in tracing and certifying title. Any process which interferes with regular
transfers under deeds of conveyance properly stamped, registered and recorded
in the registers of the Registration Department, is to be discouraged and
deprecated.

11.The
present case is a typical example of the consequences of not obtaining a
registered sale deed.

There is apparently
no reason as to why a company registered under the Companies Act should resort
to such a transaction. Execution of a will by an individual bequeathing an
immovable property to a company, is also incongruous and absurd. If there was a
bar and the process was adopted to overcome such bar regarding sale of lands,
then courts should not go to their assistance, as that would amount to perpetuating
illegalities. If there was no bar, then the questions that arise are: why
should a company hold a property in a state of suspended animation from 1991?
How can a company `verbally' agree to sell a property to someone? What is the
reason for the delay in lodging the complaints? If petitioner had purchased the
property under a registered sale deed, numerous disputes, litigations and
criminal proceedings could have been avoided. The illegal and irregular process
of `Power of Attorney Sales' spawns several disputes relating to possession and
title, and also results in criminal complaints and cross complaints and
extra-legal enforcement and forced settlements by land mafia.

12.We
are therefore of the view that the situation warrants special measures. We are
informed that sometime back in 2008, there was a proposal to amend section 147
of Delhi Municipal Corporation Act, 1957 to check and discourage `power of
attorney sales'. There was also a proposal to have special enactment relating
to registration and recording of title in Delhi. But so far nothing appears to
have fructified. It is the dream of every citizen to own a house or a plot of
land. The citizens must be enabled by the government to do so with safety,
security and without fear of litigation or defects in title.

13.We
therefore request the Solicitor General to appear in the matter and give
suggestions on behalf of Union of India. We also direct notice to the States of
Punjab, Haryana, Delhi, Uttar Pradesh and Maharashtra (represented by their respective
Chief Secretary/Revenue Secretary) to consider the following issues:

(a)Whether `power of
attorney sales' (that is transactions involving execution of Sale greement/GPA/Will)
instead of regular sales is prevalent in their respective states? (b)What are
the views of the respective state government in respect of such transactions?
(c)What steps have been taken and/or proposed to be taken by the respective
states to deal with the chaotic situation and confusion arising from such
transactions? List the matter in the last week of August, 2009.